Published in Mobiles

iPhone 6 has a 65 per cent mark-up

by on24 September 2014

That is how much you pay for a logo

Buying an iPhone indicates that you are happy to pay 69 per cent more than the product is actually worth, according to a new study. Research firm IHS has calculated that the iPhone 6 costs Apple between $200 and $247 to build. This is based on an analysis of the parts used in each model and an estimate of the labour involved which is about $4.50 for each device.

IHS found the costs range from $200 to $247 for iPhone 6 models that sell in the US for $649 and $849 without a contract. The more expensive models sport 128 GB of storage space, netting Apple a slightly higher margin. Costs for the iPhone 6 Plus run from $216 to $263 for models that sell for $749 and $949 without a contract. The model would earn Apple a profit margin of 76.7 per cent in Australia on the 128GB iPhone 6 Plus - or a 329 per cent mark-up.

Costs like advertising, marketing and distribution are not factored in to the over all costs but even so it indicates that Apple is increasing its profit margins on the phones without giving users an significant difference in product. While the iPhone 5 and the iPhone 5S both provided the same margin of around 69 per cent the first iPhone in 2007 gave Apple a 55 per cent margin.

The combined display and touchscreen take up much of the material cost. The iPhone 6's screen costs Apple $45 and the iPhone 6 Plus' screen costs $52.50, the analysis shows. A high mark up on these sorts of products is fairly typical. IHS reported that a Samsung Galaxy S5 with 32GB costs the company $US251.52. That phone sells for $599 which means that it has a 58 per cent mark-up. 

What is funny is that the Tame Apple Press is trying to tell the world that a 69 per cent markup is healthy. It is for Apple, and its shareholders it is less so for those daft enough to buy such overpriced gear. But who cares about customers?

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